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The union said questions needed to be asked about Home Australia's extensive use of contractors which prevented them getting access to protected entitlements, including redundancy payments and superannuation.

At the same time many of those contractors worked exclusively for Senator Day's companies and were "quasi-employees", Mr Cartledge said.

He said Senator Day should also be asked to explain why he ran in the recent federal election at a time when problems with his company were brewing.

Masters Builders SA chief executive Ian Markos also believed Home Australia's contractors would "end up with virtually nothing" which would likely result in a number of small companies failing.

"It shows how connected the building industry is, but also how challenging it can be," Mr Markos said.

But he warned against using the collapse to change the laws related to security of payments as a knee-jerk reaction.

"The best outcomes must be thought out carefully and not raised off the cuff," he said.